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A few bad agents do lots of harm


Reports about questionable insurance sales practices issue forth in a steady drip, and each little splash washes away a tiny bit more of the industry’s reputation. The usual defense is that complaints about unethical behavior represent a tiny fraction of the activity across the United States, but that’s not how the game works.

Each moment of unpleasantness resonates in this age of instant information. More people than ever before will hear the news, and just enough will stick to do some damage.

Each protest from a grandma who thinks she was swindled sends out a small shock wave. Her friends, relatives, neighbors – and everybody who reads about it – stores that information about insurance salesmen in a mental file marked “Don’t trust these guys.”

As an insurance capital, Des Moines suffers just a bit, too.

When the U.S. Securities and Exchange Commission starts looking into the way equity-indexed annuities are sold, and five of the top 12 sellers are based in Greater Des Moines, that doesn’t exactly suit our Iowa image. We’re supposed to be the ones you can trust because we’re nothing like those hard-hearted sellers from the coasts.

The SEC might decide that absolutely nothing was done wrong, which would be great news. But at this point, the government regulators seem to have a bad taste in their mouths about annuities.

Here’s what an SEC Web page says:

“Many life insurance policies and annuities have been sold as investments which will go up in value if the stock market rises but are insured against losses if the stock market falls. What is not properly explained to investors is that someone must die for the guarantee to ever pay off. In reality, such life policies or annuities are nothing more than mutual funds with term insurance attached.”

Leaders of insurance companies talk about the good feeling you get when your company helps people get back on their feet, helps communities find their way through disasters. But down in the trenches, we’ll always have some people who see insurance sales as just another way to make a buck.

Calling it human nature doesn’t take company executives off the hook. An important part of their job should be a constant search for the best, most reliable people – with old-fashioned Iowa scruples – to represent the company. No matter how wonderful your annual profits might be, once your good reputation is gone, you can’t buy it back.

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